business essay

Restaurant industry in noida

Published: 23, March 2015

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MRR

Executive Summary

Introduction

Objectives

The general objective of the MRR is to study the Restaurant Industry in Noida and to do a feasibility study to establish a Multi-Cuisine restaurant in Sector-63 in Noida. (Noida is an industrial city in the National Capital Region of India. Sector-63 is an area in Noida. There are many educational institutes, offices, residential apartments in and around sector-63)

Limitations and Scope

The study would be limited to the Indian market and specifically to Noida. There are certain components of the scope that are dependent on the availability and access to the reasonably accurate information.

Methodology

For this report the data will be collected from:

Primary Data

Personal interviews with customers.

Surveys

Interview with restaurant managers

Secondary Data

From the internet, journals, magazines etc.

Industry Study

Restaurant is an establishment that prepares and serves food and beverage to customers in exchange of money. Food can be eaten in the premise or many restaurants also offer home delivery and take-out. Restaurant can be called by the type of food they offer, for example, a Chinese restaurant, an Italian restaurant, a Thai restaurant.

1. Restaurant Industry.

India has arrived on the global roadmap. India has experienced increase in per capita income and the growth rate is accelerating. India's per capita income grew by almost 46% over last decade. Increasing Disposable Income and urbanization are a common phenomenon across all developing nations. India is not untouched by this phenomenon. In a report Merrill Lynch(which report, which year,source) estimates growth in urban consumption at approx. 20% annually for at least next 5-7 years. One of the important components of the national economy is restaurant industry.

Indians spend only 2.4 percent of their food expenditure in hotels and restaurants.

Americans and British, by comparison, spend 46 percent and 29 percent respectively, of their food expenditure on away from-home meals. This indicates that there is significant scope for the growth of food service sector in India in the years to come.

According to a report by market research firm RNCOS, “With the rapidly growing Indian middle class population and changing lifestyle, India is going to be one of the fastest growing food and beverage markets in the world. The Indian food and beverages market is projected to grow at a compound annual growth rate (CAGR) of about 7.5 per cent during 2009-13 and would touch $ 330 billion by 2013. Also, not only the authentic restaurant chains but even the Indian fast food market is expected to grow at a rate of 25-30 per cent annually”. Some of the major for these trends are increase in income and urban population, change in consumer behaviour, growing population of working women.
Major Factors influencing the Industry are:

Fast Growing Economy

Growth in Personal Income

Urbanisation

Shrinking Household size

Growing Number of women in workforce

Menu Diversification

(NEED TO GET NOIDA SPECIFIC DATA to elaborate on the above factors)

2. Segmentation of the Noida Restaurant Industry:

The Restaurant Industry in Noida can be segmented into the following categories:

a. Fine Dining

Fine dining refers to the cuisine and service provided in restaurants where food, drink and service is expensive and usually leisurely. Most of the fine dining or formal restaurants are located in luxury hotels or beautiful environment parks. These restaurants are regarded as high-end restaurants. These restaurants serve some of the best meals and normally have best services. For example Hotel Radisson in Noida serves an array of different cuisines from India cuisine to Chinese, to Thai to continental cuisine. The economics of the fine dining differs from that of the average restaurant. Meal prices, especially for wine are high. The average check runs Rs. 800 or more. Rents can be quite high and large budget for public relations are common. Because of the expertise and time required for many dishes and because highly trained chefs are well paid, labour cost is high. Much of the profit comes from alcohol and beverage sales. Flair and panache in service are part of the dining experience. Table, glassware and napery are usually expensive and the appointment can costly, often including paintings and interesting architectural features. Basically these restaurants are not my direct competitors in terms of location, positioning and cuisine. But these high-end restaurants can be set my benchmark criteria to match the food quality, variety as well as service. Especially for the marketing strategy and management system would be good examples in reference.

b. Fast Food, Quick Service Restaurant (QSR)

Fast food, quick service restaurants are now the integral part of Noida food industry. Many big names have arrived in Noida. McDonalds, KFC, Pizza hit, Dominoes, Subway, Narulas, Sbarro, are a flourishing business opportunity and a rapidly normal part of the urban life. Growing taste for Western food and change is people's lifestyles are the major reasons for the growth of fast food and QSR chains. These, fast or QSR are growing rapidly in terms of turnover and outlets. Meanwhile these QSR are the most aggressive companies in restaurant industry and they also have the most comprehensive operation and management system if compare to other segment of restaurants. But they are not my direct competitors in terms of operation and food concept. QSR's operation and management system can be the best reference when we start expanding. Although it seemed that a few huge QSRs completely dominate the restaurant business. But the people's habits and taste change drastically along with increasing living condition and disposable income. So there is plenty of room for independent casual dining restaurants in certain unique concepts and certain locations.

c. Casual Dining

Casual dining restaurants are a hybrid of the fine dining and fast food concepts. A more casual description of the members of this segment would be any establishment that does not fall under fine dining and fast food segments. The casual dining concept involves quick service and a more comfortable ambiance unlike the elegant fine dining restaurants. Almost all the restaurants offer services in the specially decorated halls. These restaurants also offer full menu quality-standardized food items that are cooked and served fast. These restaurants offer plentiful portions at the reasonable prices. Their business hours are usually 10:00 in the morning to 2:00 in the afternoon and from 5:00 in the afternoon to 9:00 in the evening.

d. Stalls, Street side food:

Small shops and stalls are the very important eating outlets in India. At such places people can get eatables and very reasonable prices. Such stalls provide more of snacks or full course meals. These places are the most feasible for in between meal munching. This category is not my competitor.

Chapter wise conclusion

3. Macro Environment (SPET analysis) - Micro Market In Noida

3.1 Social Factors:

The restaurant and food industry of any country, region is highly influenced by the social and cultural traits and eating habits of the people residing in that country or region. So if a person is interested in entering into restaurant or food industry he or she has to take into account and must be sensitive to the social, cultural as well as religious values followed by the society in which he/she is opening a restaurant.

The advent of IT, BPO and other industries in Noida has an effect on the society and the culture of city. Because of the Industries, there are people from different regions of India living in Noida; the standard of living of the people has increased. Now people celebrate occasions like Birthday in Restaurants or avail the catering services of a restaurant rather than preparing the party food at home and organizing the party at home. Also the party culture in the city is increasing due to more exposure to other cultures and obviously due to more disposable income. Also there has been an increase in the preference for different cuisines within the population and locals are keener than ever to try new cuisines, dishes. Also with an increase in the working women the frequency of eating out is increasing.

3.2 Political Factors:

The political scenario in any country can have a significant bearing on the conduct of business activities, infrastructure development and the overall standard of the living of the people in the nation. The restaurant industry is generally affected by an economic downturn and if there is political unrest or instability, this would in turn lead to the weak business and investment climate, which will ultimately impact the restaurant industry negatively. The current government in Uttar Pradesh (Noida is a city in the state of Uttar Pradesh) is stable and there is political unrest or instability. The current government has been taking initiatives to spur economic growth in Uttar Pradesh, especially in Noida. The Uttar Pradesh is investing heavily in Noida for parks, SEZ other things which will boost tourism and spur further economic growth in Noida. Also there is an international Airport planned in Noida. The government regulation related to licenses and permits required for opening up restaurant establishments, timing restrictions, restrictions of foreign franchising and ownership stakes, import policies, minimum wage requirement, taxes can have significant impact on the growth of the restaurant industry. Noida has earned a respectable reputation in running IT/ITES, BPO and call centres. This has been possible through the government support and led to large number of youth coming to Noida for jobs in the last few years.

3.3 Economical Factors:

NEED TO GET MORE DATA for discussion

Over the last decade the Noida has seen tremendous growth. Many industries have come up in Noida, which has led to the increase income of the people. Now people have more Disposable Income then they had earlier.Â

More Discussion needed on the income level, spending capacity, spending pattern of the people of Noida

3.4 Technological factors:

In the modern world technology plays an important part in every aspect of the life. Even Restaurants are not untouched by the advent of technology. In fact in the efficient running of the daily operations of a restaurant technology plays a very important part. Right from the procuring raw materials, storing them, cooking, serving and billing technology is involved in every step. To gain competitive advantage or to compete it is very important for the restaurants to invest in technology. Use of Technology in a restaurant must not only be limited to basic kitchen appliances like microwave, refrigerator etc. Technology also can be used outside the kitchen like use of credit card machines, POS (Point of Sales) system etc. The POS (Point of Sale) system helps a restaurant to feed in orders, check the accuracy while billing to avoid errors, generate KOTs (Kitchen Order Tickets) in the kitchen of food and beverage preparation, check daily food and beverage sales, conduct ABC analysis as well as determine fast selling and slow moving items on the menu so that corrective measures can be adopted by the restaurant manager.

POS can also be used to track the guest satisfaction. Restaurant also must invest in devices which can ensure that the raw material and food are free from any spoilage or contamination because such things can hamper the image of the restaurant. A restaurant should also keep track of its raw material inventory in order to coordinate with its suppliers more efficiently. This can be done by investing in software. The equipments used in the kitchen must be of one of the latest technologies and at the same time cost-efficient and convenient to use and operate. A restaurant can also invest in Wi-Fi, internet marketing, entertainment equipments etc. to attract more customers. There are a lot of emerging and new trends in the technologies and the restaurant should accordingly conduct a cost and benefit analysis of adopting a particular technology so that it ultimately leads to the cost-efficient operations and higher customer and employee satisfaction. Since Noida is in National Capital region, the latest technology available in India can be accessed easily.

Market Analysis

1. Location of the proposed Restaurant:

For the Restaurant business location is of great importance. The location of the restaurant is as crucial as great food and service. Major criteria for the selection of location of a restaurant are:

Area demographics

Parking

Accessibility

Visibility

Competition

The Proposed restaurant will come up in Sector-63 of Noida. There are many offices, apartments, educational institutes in the area nearby sector-63. Also there are upcoming areas like crossing republic, Noida extension which will have about 40000 flats in next 2-3 years. In next 5 years these areas will have approximately 150,000-200,000 of resident. Sector-63 can be accessed very easily and it is visible from the main road.

2. Primary Target Market:

My primary target market isurban professionals, office workers, yuppies, corporate offices and residents of the Noida (especially Sector-62 residents). There are many offices, institutions in and near sector-62. The professionals working in the offices frequently visit the restaurants for team lunch, dinner, team parties, and corporate parties. Also many corporate give catering orders for the parties organized in their campus.

3. Competitor Analysis

The data in the competitor analysis has been obtained through information from the respective restaurant managers, employees, visitors and general observation while frequenting the restaurant.

(DETAILS TO BE COMPLETED AFTER INTERVEIWS with managers, customers)

a. The Asia Kitchen

Asia Kitchen is located in the H-block market of sector on ground floor.

b. Lemon Twist

Lemon Twist is located in the H-block market of sector on 2nd floor. This restaurant is one of the best in Noida. It is known for its high quality of Chinese cuisine. One of the disadvantages of the restaurant is it very high pricing.

4. Substitutes:

There are many substitutes to the full service high-end Indian restaurants from fast food chains, cooking at home to many of the street side stalls. Therefore consumers do have a substantial number of options to eat and dine apart from simply having meals at home. However, due to the fast and hectic working lives, more and more people are opting to eat out more frequently. The desire to eat out at a particular food outlet is a function of how much they are willing to spend on a meal and the kind of cuisine they want to have for a particular meal. Therefore, the threat to profitability from substitutes for a new entrant is high and in this regards, the industry is not favourable.

5. New Entrants:

Given the high growth potential in the restaurant business, the barriers to the entry for a new entrant are very less as there are very low entry and exit barriers due to easily available capital, government permits and licenses so almost anyone can open a new restaurant. But the high cost of real estate raises the bar for new entrants. Also in order to open a full service speciality high end restaurant does require sound understanding of regional Taste and the intricacies required for preparation. For this experienced chef or cook is required which is not very easy to come by. Since a high-end restaurant require a greater capital investment, only people with some understanding of the restaurant would like to venture into something like this as compared to a small scale fast food restaurant that comparatively is much easier to open and operate. Therefore the threat to profitability with regards to new entrant is medium and the industry could still be considered as favourable.

6. The Buyers:

Apart from the above mentioned restaurant there are few more eating outlets in Sector-63 and many more restaurants in the Noida and the adjoining location. So, for the customers the switching cost from one restaurant to another restaurant is very less as there is options easily available to choose from. Therefore the threat to profitability with regards to the buyers is high in this industry.

7. Suppliers in Noida:

With one of the biggest market (Azadpur Mandi) of India is in Delhi there are plenty of suppliers to choose from. Also there are many villages in the vicinity of the Noida from where one can secure the supply of all the raw materials required. Therefore these suppliers typically have low bargaining power. Apart from the raw material supplies, restaurant has to look for skilled labour, chef, cook and waiters. The staff that will be employed also needs to train adequately. Also due to high growth of the Restaurant Industry and the reducing size of the globe retaining the talent is a big challenge. Therefore, the threat to profitability from suppliers would range from low-medium but still pose as being favourable.

8. Potential Demand:(not yet started)

What is the total industry size of the restaurant industry in Noida? How it has grown in last 5 years? How the demand is going to be in next 5 years? What are the factors that can have an impact on the potential Demand?Â Â Â Â Â Â Â Â Â Â Â Â Â

9. Surveys and analysis:(not yet started- will start once survey is completed)

Survey Objectives

Surveys will be conducted to find out the preferences and customer demands. The surveys will try to find out the demographic profile of the customers, the frequency of visits, the expectations of the customer, the reasons for a restaurant patronage, the satisfaction level from existing restaurants, the average check per person, the willingness to spend for fine dining etc.

10. Key Success factors:(started BUT not yet complete)

According to the restaurants interviewed for this study and the survey analysis, the key success factors in the restaurant business are basically food and drinks, efficiency of service, price, ambiance, location, and entrepreneurial spirit.

Quality and Taste of Food Beverages:The food and beverages are at the centre of the Restaurant business. Customers chose a restaurant and frequent it for the quality and taste of the food and beverage it serves. It is also important to maintain the consistency of the taste and quality. For the same purpose the work force must be skilled and head chef is a very valuable person in any restaurant. Also the recipes must be standardized and documented to maintain the consistency. There must be a standard procedure in place to procure the raw material of highest quality. Additionally, today the customers are paying attention to the presentation, freshness and hygiene instead of just looking at the availability and taste of the food.

Efficiency of Service:In Modern and fast world when everyone is very busy, time seems to be a scarce resource. So in such case the service becomes a very import aspect of a restaurant and cannot be ignored. Customer of today is well travelled and is aware of the best of the best services across the globe, which increases the expectations of the customers. To meet the increased expectations, the staff of the restaurant must be adequately skilled and trained to provide a good and efficient service. For the restaurants that serve similar kind of food and beverage, service can play the role of differentiator. The Goal of the service must be to delight the customer during “Moment of Truth”.

Price: To s

Location:

Ambiance:

Hygiene and Safety:

PTM and positioning:

Differentiation Factor/USP:

Entrepreneurial spirit:

Cost Structure:

11. Challenges and Risks: (not yet started)

What are the challenges and risks associated with opening of a restaurant?

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